Of all the market distorting, developing country repressing and untouchable government support programs, agricultural subsidies are the best, or the worst, example. Now it seems that rising agricultural prices and increased and perhaps insupportable go...

Agricultural Subsidies:going, going, gone?

Of all the market distorting, developing country repressing and untouchable government support programs, agricultural subsidies are the best, or the worst, example. Now it seems that rising agricultural prices and increased and perhaps insupportable government debt may actually begin the process of their demise. The reasons for rising agricultural prices are clear: fuel costs are growing (To grow, gather and transport the produce), demand is increasing as more of the world eats like the developed world has for many years, and alternative fuel production using biofuels has blossomed, because of government environmental policies and rising oil prices (already discussed on this blog). But perhaps more importantly it is the overall expectations in the markets for pricing agricultural products that more will never be quite enough. The effect of these factors is the farmer without an obvious need for government support.

The upside is of course that if we (the west) compete without government help in this market then the developing world, with its massive resources can attract proper investment and use this to first feed their own and then help feed the world. If we are not supporting the farmers then why protect their markets? In general private farmers (not ranchers) help to build rich societies. One of Deng Xiao Ping‘s first reforms, that led to China‘s rise, was to give peasants their own land and the right to keep what they earned from it. Third, we can let economics drive the conservation of green spaces in the developed world. Sure, much of that space would be industrialized farming but at least it would give the advocates of slowing urban sprawl a better chance when discussing land values with developers and local politicians. Fourth, one of the larger government programs can be wound down with significant savings. Yeah, I know, they may just blow it somewhere else. But its a start.

There are barriers to this of course. People love the idea of the gentleman farmer with his sturdy family, working the land. It is how we started out, in this country anyway. There are still a few people making a living this way. We like this image and those who want this money, small farmers and large, use it. There are votes in them there counties, can’t forget that. As well, there is something strategic about being able, if it all goes sideways, to be able to at least imagine keeping the ability to feed yourself, as a nation. I get that. But taken as a whole, it would be better for all of us to use this opportunity to let agricultural subsidies go. All signs point to the farmers being perfectly capable of taking care of themselves.

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